THE IMPORTANCE OF THE DEMONSTRATIONJuly 11, 2016
Dealerships understand that a successful test drive demonstration increases the chances of a sale by bringing a vehicle to life in a more direct way than any online brochure, YouTube video or Virtual Reality experience will do.
In 2015 17.4 million new vehicles were sold in the USA through 18,011 dealerships with the average US dealership selling 970 new vehicles and a similar number of used. With 80% of those sales having had a test drive before purchase it means that there are more than 700,000 new and used vehicle test drives completed each week throughout the country on sold vehicles alone.
Factor in those demonstrations that didn’t result in a sale and the total number is way over a million test drives conducted through dealerships every week. This represents an investment of millions of dollars in man-hours, fuel costs and vehicle expenses, which emphasizes the importance of achieving a return on the investment from the activity, easy to measure but hard to cost.
The demonstration test drive plays a number of critical roles at a dealership:
- It help to move the customers from the evaluation stage in the purchase decision to the buying stage by building emotional desire and meeting customers explicit needs
- It helps to ensure that there are no misunderstandings about the vehicle, its features, the way it handles and performs, which could otherwise lead to post-sale customer dissatisfaction
- It enhances the sales person’s conversion of a prospect into a sale, by moving the customer logically along the sales process.
- It’s a key part of the contract between the dealership and the manufacturer, the reason why demonstrators are supported on floor plans.
Probably the most important sales factor is that for every two quality demonstrations given there is a proven closing ratio of 50%. The significance of the test drive to each dealership then is a critical success factor, because the conversion rate almost doubles when a customer has a successful test drive demonstration than those customers that don’t.
So given the importance of the test drive you would expect Sales Managers to reinforce the message daily through their training and coaching. However in reality most Sales Managers have never even accompanied their sales people on a test drive, or asked a sales person to role play an actual test drive with them. For those that have done they rarely revisit and retest. This means that for those sales people that have fallen into bad habits on their test drives remain ignorant to the fact.
What this means is that for most dealerships, a key step in the sales process,RTS process steps 2016 is not looked at to see whether it can be improved. In the worst case the test drives given could be awful, doing more damage than good with both sales people and their managers completely unaware as to the damage done; which is unforgivable given a dealerships investment in them.
SELLING SMART PHONES
If you were to upgrade your smart phone for a new one without anyone showing you how it functions most people would be able to switch it, make a call, send a text message and access Google etc. However they wouldn’t necessarily know that the smart phones applications could control your heating and lighting at home, could check you into a hotel room, get an accurate weather forecast, use it to measure your heart rate and hold a boarding pass for your flight to name just a few functions of a smart phone today, unless they had knowledge and experience of the applications.
Without knowing how to use a smart phone you would most likely view the capability of the upgraded phone, on the previous experiences you have already had with previous smart phones in the past, which wouldn’t always a fully educated view given the speed that technology moves Like comparing an IPhone 2 with an IPhone 6S, they are worlds apart .
So, if you don’t take the time to demonstrate a product, you reduce the chance of it being purchased, as you are expecting your prospect to find out everything for themselves, which is fraught with pitfalls.
At the very least, with the connected car being so complicated today, with a poor demonstration you are losing the opportunity to let the vehicle highlight its key benefits at arguably the most crucial time in the buying process.
And if Sales Managers don’t know the expertise of their team at demonstrating their products then they are missing a trick; blind to mistakes and blind to opportunities to improve performance that increase sales.
A CAREFULLY PLANNED TEST DRIVE = MORE SALES
When *surveyed some 60% of unsold prospects (new vehicle customers) had taken a test drive as part of their shopping experience.
*SP 14 is an internet only sales person, resulting in a high close and low demonstration rate.
Delving into a dealerships CRM to look at the other side of the coin, sales person activity results report demonstration ratios higher than 80%. Clearly something is amiss as the numbers show a variance of 20%. What it is clear from the statistics though is that more demonstrations result in increased sales.
The reason the numbers don’t stack up? What is most likely happening in this situation is that only hot prospects are being recorded into CRM, resultant in a high close and higher demonstration rate than is actually being achieved (sales people 3, 6, 18,19 have high closes against demonstrations).
Among used vehicle buyers, overall test drive rates are higher, mainly because customers will be purchasing the specific vehicle they are looking at. Therefore a used vehicle sales process that is underpinned by robust quality test drives is a more successful model.
The timing of the demonstration and the length of the demonstration are equally important. Test drives earlier in the sales process allow more time for a relationship between the sales person and the customer to be developed.
Test drives later in the sale tend to be more a formality as pricing has been agreed to. The car still needs to prove itself, however the price negotiation has already been concluded.
The average time for a demonstration is around 30 minutes, with an hour being about the maximum.
Investing more time with customers has increased in importance over the past few years, as most will already have moved towards the final purchasing stages through the digital research completed before they even set foot in the dealership.
As a result, dealers may only get one chance to win over customers or risk losing them to another dealership, putting even more emphasis on the quality of the demonstration. *Further research has found that most people take a test drive during the critical period when they have narrowed down their selection to a few vehicles (56%) or are certain of what they want (38%).
On average, customers in 2016 revealed that they test drive just two vehicles and nearly two-thirds of buyers (61%) said a test drive can change their mind on the vehicle they are planning to purchase.
With so much at stake dealers risk losing the deal if they don’t get the test drive right. Test drives don’t just help a dealer to sell a vehicle; they help sell the client the right vehicle with customer satisfaction prior to the sale helping improve the ownership experience.
THE HUMAN TOUCH
The human touch is still at the heart of the sales process, despite the growing influence of the digital world (perhaps the word digital should be dropped as it really is the new normal way of shopping for a car for the majority of customers).
Although 75% of dealerships offer online booking of test drives, the vast majority say customers prefer to book by telephone or in person at the dealership, a solid reason for having a Business Development Center BDC. This reflects a survey of customers which found that most prefer to contact the dealer direct, while 30% prefer to request a test drive online. Either way a BDC can help to pave the way.
In truth, adopting both approaches maximizes the chance of offering a solution that fits individual customer requirements.
However, unless strict processes and controls are in place, any test drive promotion could risk losing sales leads rather than generating them. As an example an *international survey of 2,500 online test drive requests from a manufacturer found that 46% of requester’s received no contact after 14 days.
In another assessment, a quarter of test drive requests made online with dealers received no response at all!
So what do accompanied demonstrations do? In its most basic form a demonstration:
- Allows the customer to experience the vehicle
- It shows the customer what the vehicle can do for them –proving what it can do it for them. The power of the demonstration is that it subconsciously influences the customer through:
- TOUCH, the touch of a new or different vehicle, (the paintwork, steering wheel, seats,) can raise desire through sensations of luxury, build qualify, softness – these all influence the customer’s feelings.
- SMELL, the smell of a new vehicle is often forgotten by salespeople because they are in and out of them all day, every day – “a new vehicle smells wonderful.”
- SIGHT, the look of a new car can seriously influence a customer. The manufacturers invest $ millions on vehicle design to reflect light and create lines that enhance the style and looks of a vehicle.
- SOUND, the sound an engine makes, or a clunk of a door can give feelings of power or build quality.
- Builds emotional desire in the customer by engaging the customers imagination
- Helps the customer to rationalize the purchase decision
- Develops reciprocity, that fact a salesperson has gone out of their way to help the customer means that the customer is more likely to return the favor by purchasing the car, its simple human nature.
- Allows the vehicle to sell the vehicle!
VIRTUAL TEST DRIVES
Manufacturers recognize that demonstrations influence however they have little control how they are delivered. This is why most are going down the road of first generation virtual test drives, virtual reality experiences that mirror physical ones albeit they have a way to go it really won’t be long before your customer will be able to sit at home and have a virtual reality test drive without touching the dealership.
Virtual reality VR cameras can range from $400 such as the Ricoh Theta through to Nokia OZO at $60,000. VR footage is much more immersive than flat video and to some degree bridges the gap between a video test drive and a real one.
DEMONSTRATION TEST DRIVE – POINTS TO CONSIDER
A predetermined demonstration route is recommended. You should have a route that incorporates the conditions and distance that will enable the customer to really experience the vehicle. It should be approximately 2-3 miles in length, have light traffic and be as uncomplicated as possible.
The sales person is more knowledgeable about the vehicle, that’s why the manufacturers give salespeople product knowledge training and insist that they have demonstrators available for the salespeople to drive.
The implementation of product “Geniuses” in Apple stores was designed to enhance the buying experience without any hard sell, allowing the “Geniuses” to answer questions and demonstrate products. Widely copied in retail by Microsoft, ATT, Samsung and even BMW, right at the core of the Geniuses’ role is their ability to demonstrate the product. That’s why it works so well in retail.
If the demonstration is unaccompanied then the salesperson isn’t able to communicate that knowledge and positively influence the customer. Neither can they answer any questions the customer might have as the test drive progresses.
One unanswered question can lead to an objection, one that you will be unaware of if you do not accompany the customer.
COMMON SENSE RISK PREVENTION (always accompany)
It is important not to allow the customer to drive dangerously or to break any traffic laws while in your vehicle, how can you do that if the test drive is unaccompanied?
Always get a copy of the driver’s license before you test drive a vehicle (card readers can read license and put the data straight into your DMS saving you and the customer time, which will help you).
The salesperson should drive the car to the turnaround point of the test drive course and continue featuring the vehicle in the process. If the demonstration is unaccompanied how do you accomplish this?
The salesperson should then ensure that the customer is set up to drive the car properly. Make sure that the customer is set up in the driver’s seat; show the customer how to adjust the seat, mirror, tilt wheel, outside mirror, and the seat-belt. This is safety related and often overlooked. It also DEMONSTRATES that you care.
Let the customer drive the car and at this point don’t enter into unnecessary conversation. Allow the prospect to concentrate on the new vehicle and simply answer any questions that they have.
THE DEMONSTRATION -BUYING SIGNALS
It is generally at this stage of the Sales Process that your customers are likely to start giving buying signals. They come in many shapes and forms, and you need to raise your awareness of them.
If you are not in the vehicle you won’t see the buying signals
- In addition, watch your customers’ body language and facial expressions as:
- They touch and feel the car
- They admire and look at the car
- They interact with you
- They are really positive about the vehicle
- They smile.
And finally at the end of an accompanied test drive ascertain the customer’s opinion on the car and ask a simple question such as:
- Do you like it?
- Subject to agreeing the figures are you happy that this is the vehicle for you?
- Figures to one side are you happy to go ahead on the car?
- Shall we get the paperwork sorted for you?
All are trial, or pre-closes. A pre-close can’t be done if you are were not in the car to see the buying signs!
The key ratio for success on accompanied demonstration is:
- 100% Customer data capture of face to face prospects
- 80% DEMO
- 80% Quote
- 50% sale ratio on demonstrations given
Or in simple terms speak to 10 prospective customers; give 8 demonstrations, give 8 quotes and that activity will result in 4 sales.
For unaccompanied demonstration the numbers tend to be lower at around just 35% of the unaccompanied demonstrations closed with a 20%-25% close.
A sales team’s demonstration and sales numbers over 12 months; SP 9 is working smart and getting the best result from fewer prospects. How are they doing it? By spending more time with each prospect, and by giving more quality demonstrations that result in more sales.
Demonstrations are hard work! As with all things in life – the more effort you put in, the more you get out – or in the words of Gary Player, the Golfer:
“THE MORE I PRACTICE, THE LUCKIER I GET!”
*Research data with thanks to AM-Online 2016